Now, it’s time to figure out which ETFs look promising for your 2012 investment dollars. But first, let’s take a look back at the ETF marketplace in 2011.

According to Morningstar.com, here were the 10 worst-performing ETFs for the past year:

ETF

Ticker

1-year return (%)

ProShares UltraShort Silver

ZSL

-66.31%

Direxion Daily India Bull 3x Shares

INDL

-64.22%

PowerShares DB 3x Short
25+ Year Treasury Bond ETN

SBND

-63.78%

Market Vectors Solar Energy

KWT

-63.46%

iPath Global Carbon

GRN

-62.47%

C-Tracks Citi Volatility Index

CVOL

-62.32%

Direxion Daily China Bull 3x

YINN

-62.25%

Guggenheim Solar

TAN

-61.87%

Direxion Daily Emerging Markets
Bull 3x

EDC

-61.30%

Global X Uranium

URA

-57.27%

As you can see, alternative energy and emerging markets didn’t fare too well last year.

And here are the top 10 performers:

ETF

Ticker

1-year return (%)

PowerShares DB 3x Long
25+ Year Treasury Bond ETN

LBND

102.71%

Direxion Daily 20+ Year Treasury Bull 3X

TMF

96.95%

ProShares Ultra 20+ Year Treasury ETF

UBT

65.71%

Direxion Daily India Bear 3X

INDZ

58.98%

PIMCO 25+ Year Zero Coupon
U.S. Treasury Index Fund

ZROZ

58.74%

Vanguard Extended Duration

EDV

53.89%

Direxion Daily 7-10 Year Treasury Bull 3X

TYD

44.49%

iPath U.S. Treasury 10-Year Bull

DTYL

42.25%

iPath Treasury Long Bond

DLBL

42.06%

PowerShares Base Metals Double Short

BOM

39.34%

Huge bets on leveraged debt and Treasuries were the golden ETFs of 2011. But as I said in my last article, leveraged ETFs are very risky and should be purchased only by experienced, sophisticated investors who well understand their risks.

However, it’s clear that in a year when most stock market sectors saw negative, or tepid returns, fixed income was the winner. Yet a couple equity sectors outperformed, as shown by the next chart, and represented by various iShares ETFs:

Sector

Symbol

1-year return (%)

Health Care

IXJ

8.2%

Consumer Staples

KXI

7.3%

Energy

IXC

-0.3%

Technology

IXN

-3.7%

Telecommunications

IXP

-4.8%

Consumer Discretionary

RXI

-5.3%

Utilities

JXI

-8.0%

Industrial

EXI

-8.9%

Basic Materials

MXI

-18.4%

Financial Services

IXG

-21.4%

Source: SeekingAlpha

Both health care and consumer staples managed to eke out decent returns last year, but it certainly was not a banner year for equities or equity ETFs!